The End of the New World Order

by Seumas Milne                         Guardian/UK                           October 19, 2012

The following is an edited extract from Seumus Milne's new book, The Revenge of History: the Battle for the 21st Century, published by Verso.

In the late summer of 2008, two events in quick succession signalled the end of the New World Order. In August, the US client state of Georgia was crushed in a brief but bloody war after it attacked Russian troops in the contested territory of South Ossetia. Culture shock ... the collapse of Lehman Brothers ushered in the deepest economic crisis since the 1930s.

The former Soviet republic was a favourite of Washington's neoconservatives. Its authoritarian president had been lobbying hard for Georgia to join Nato's eastward expansion. In an unblinking inversion of reality, US vice-president Dick Cheney denounced Russia's response as an act of "aggression" that "must not go unanswered". Fresh from unleashing a catastrophic war on Iraq, George Bush declared Russia's "invasion of a sovereign state" to be "unacceptable in the 21st century".

As the fighting ended, Bush warned Russia not to recognise South Ossetia's independence. Russia did exactly that, while US warships were reduced to sailing around the Black Sea. The conflict marked an international turning point. The US's bluff had been called, its military sway undermined by the war on terror, Iraq and Afghanistan. After two decades during which it bestrode the world like a colossus, the years of uncontested US power were over.

Three weeks later, a second event threatened the heart of the US-dominated global financial system. On 15 September, the credit crisis finally erupted in the collapse of America's fourth-largest investment bank. The bankruptcy of Lehman Brothers engulfed the western world in its deepest economic crisis since the 1930s. "The Bush administration's wildly miscalculated response turned the atrocities in New York and Washington into the most successful terror attack in history."

The first decade of the 21st century shook the international order, turning the received wisdom of the global elites on its head – and 2008 was its watershed. With the end of the cold war, the great political and economic questions had all been settled, we were told. Liberal democracy and free-market capitalism had triumphed. Socialism had been consigned to history. In 1990, George Bush Senior had inaugurated a New World Order, based on uncontested US military supremacy and western economic dominance. This was to be a unipolar world without rivals. Regional powers would bend the knee to the new worldwide imperium. History itself, it was said, had come to an end.

But between the attack on the Twin Towers and the fall of Lehman Brothers, that global order had crumbled. Two factors were crucial. By the end of a decade of continuous warfare, the US had succeeded in exposing the limits of its military power. And the neoliberal capitalist model that had reigned supreme for a generation had crashed. It was the reaction of the US to 9/11 that broke the sense of invincibility of the world's first truly global empire. The Bush administration's wildly miscalculated response turned the atrocities in New York and Washington into the most successful terror attack in history.

Not only did Bush's war fail on its own terms, spawning terrorists across the world, while its campaign of killings, torture and kidnapping discredited Western claims to be guardians of human rights. But the US-British invasions of Afghanistan and Iraq revealed the inability of the global behemoth to impose its will on subject peoples prepared to fight back. That became a strategic defeat for the US and its closest allies. This was the first of four decisive changes that transformed the world – in some crucial ways for the better. The second was the fallout from the crash of 2008 and the crisis of the western-dominated capitalist order it unleashed, speeding up relative US decline.

A voracious model of capitalism forced down the throats of the world as the only way to run a modern economy, at a cost of ballooning inequality and environmental degradation, had been discredited – and only rescued from collapse by the greatest state intervention in history. The baleful twins of neoconservatism and neoliberalism had been tried and tested to destruction. The failure of both accelerated the rise of China, the third epoch-making change. Not only did the country's dramatic growth take hundreds of millions out of poverty, but its state-driven investment model rode out the west's slump, making a mockery of market orthodoxy and creating a new centre of global power. That increased the freedom of manoeuvre for smaller states.

China's rise widened the space for the tide of progressive change that swept Latin America – the fourth global advance. Across the continent, socialist and social-democratic governments were propelled to power, attacking economic and racial injustice, building regional independence and taking back resources from corporate control. Two decades after we had been assured there could be no alternatives to neoliberal capitalism, Latin Americans were creating them.         http://www.commondreams.org/seumas-milne